Cramer: Market Decline Is an Opportunity

Investors are shocked – shocked! – that the market’s end-of-year pop is suffering a correction. Cramer’s not sure why, though, considering that most sectors have been, and still are, struggling through this recession. Is it any wonder the Dow would retreat from 9,000 given the state of retail, oil, industrials, financials and tech?

Cramer attributed that move in the last week of 2008 to Pollyanna upgrades and investors overconfidence. People on Wall Street were just too positive. But they were shaken from their daze after KLA-Tencor pre-announced poor numbers and Transocean announced it was seeing project cancellations. And Merrill Lynch downgraded Corning. Retailers like Best Buy, as well as banks like Citigroup and JPMorgan Chase, are struggling as well.

The only thing that surprised Cramer, he said, was that the market went up at all as 2008 was coming to a close. With just a few companies doing well right now, the rise in stocks was undeserved.

But a market decline is often an opportunity, so Cramer recommended putting some cash to work. He still likes Caterpillar, which is nearing his under-$40 price target, and NYSE Euronext has dropped so much the dividend yield is up to 4.9%. Home Depot, one of his top Dow stocks for 2009, is paying out a 4% dividend, so that stock, too, is a buy. These are all damaged stocks, Cramer said, not damaged companies.

Join Cramer live in the studio for Mad Money: The State of Cramerica, a special town hall-style show on Wednesday, Jan. 21. Get your free tickets here!